A third party risk management framework is a set of policies, procedures, and tools that an organization uses to identify, assess, and manage the risks associated with its relationships with third parties.
The purpose of a TPRM framework is to help an organization ensure that it is working with trusted partners who are capable of meeting the organization's needs and complying with its policies and standards.
Why are TPRM frameworks important?
Third party risk management (TPRM) frameworks are important because they help organizations identify, assess, and manage the risks associated with their relationships with third parties. These risks may include financial, reputational, legal, and regulatory risks, as well as risks to the confidentiality, integrity, and availability of the organization's data and systems.
By implementing a TPRM framework, organizations can ensure that they are working with trusted partners who are capable of meeting the organization's needs and complying with its policies and standards. This can help organizations avoid costly disruptions and potential damage to their reputation, and protect the organization's interests and assets.
In addition, TPRM frameworks can help organizations comply with relevant laws, regulatory requirements, and industry standards. Many industries have specific requirements for managing third party risks, and organizations that fail to adequately assess and manage these risks may face regulatory penalties or other consequences.
Essential Factors to Consider when Choosing a TPRM Framework
When deciding on a TPRM (Third-Party Risk Management) framework, it's important to take into account key considerations. These factors are crucial in establishing a successful and robust TPRM strategy.
- Alignment with business objectives: The TPRM framework should support the organization's overall business objectives and help the organization achieve its goals.
- Scalability: The TPRM framework should be able to accommodate the organization's current and future needs, including any changes in the number or complexity of third parties that the organization works with.
- Integration with existing processes: The TPRM framework should be able to integrate with the organization's existing processes and systems, rather than requiring significant changes or additional resources to implement.
- Ease of use: The TPRM framework should be easy to use and understand so that it can be effectively implemented and maintained by the organization.
- Customizability: The TPRM framework should be flexible and customizable so that it can be tailored to the organization's specific needs and requirements.
- Cost: The TPRM framework should be cost-effective, with a reasonable balance between the benefits it provides and the resources required to implement and maintain it.
- Support and maintenance: The TPRM framework should come with ongoing support and maintenance from the vendor or provider, to ensure that it stays up-to-date and effective.
By considering these factors, organizations can choose a TPRM framework that is well-suited to their needs and helps them effectively manage the risks associated with their relationships with third party vendors.
Frameworks for TPRM
Below are some of the frameworks used for third-party risk management.
NIST Risk Management Framework (RMF) 800-37
The National Institute of Standards and Technology (NIST) has developed a comprehensive risk management framework that allows organizations in all industries to effectively integrate third-party risk management with information security management.
The (NIST) 800-37 framework provides guidance on assessing the security of systems, analyzing threats and implementing controls to protect systems and data. Section 2.8 of NIST RMF is particularly relevant for addressing supply chain risk. This framework provides guidance for organizations on how to identify, assess, and respond to potential risks associated with third parties.
NIST cybersecurity framework (NIST CSF)
The NIST Cybersecurity Framework (CSF) offers best practices that can be helpful when designing vendor questionnaires. The NIST CSF is a set of standards that provides a common reference model for discussing cybersecurity issues and is widely regarded as the gold standard for building a cybersecurity program.
By basing your vendor risk questionnaire on controls found in the NIST CSF, you can accurately assess a potential vendor's cyber risk profile as part of the assessment process. This can be especially useful for organizations that have significant data privacy or regulatory compliance concerns.
ISO 27001, 27002 and 27018
The ISO 27001, 27002, and 27018 standards can be used to create a framework for evaluating third-party risk, from the initial due diligence process to ongoing monitoring. By understanding how these standards apply to third-party risk management, organisations can ensure that their vendor risk assessments are thorough and comprehensive. While these standards cover a wide range of topics beyond third-party risk, they do include a significant section on managing supplier risk as part of a broader information security program.
When designing a TPRM program, it is essential to have an effective and comprehensive framework in place to ensure the proper management of third-party risk. This includes checking broader information security controls as well as the related ISO provisions. These controls can help ensure that your TPRM program is comprehensive and effective in managing the risks associated with your relationships with third parties.
ISO 27036 is a standard for information security for cloud services. It provides guidance on how organizations can secure their information when using cloud services.
The standard is relevant for organizations of all sizes, including small and medium-sized enterprises, and can be applied to various types of cloud services, such as infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS). It is intended to be used in conjunction with other information security standards, such as ISO 27001, which provides a framework for information security management.
Final thoughts on TPRM frameworks
Setting up a third party risk management program can help an organization reduce the risks associated with its relationships with third-party vendors and ensure that it is working with partners who are trustworthy and reliable. It is an important part of an organization's overall risk management strategy and helps to protect the organization's interests and assets.
To make the management of third-party relationships more efficient, organizations adopt intelligent tools that use existing cyber security risk data to streamline their third-party risk management processes. The 6clicks platform assists in identifying and prioritizing third-party cyber risks.
With automated assessments, in-built resources for implementing frameworks, and easy monitoring, it is easy to secure your organization against third-party risks. To know more, see our solution page - Vendor Risk Management.
For more information on how 6clicks uses automation and AI to build a risk and compliance platform that is trusted by SMBs, MSPs, advisors, and large enterprises, book a demo with us and get started with 6clicks.